What's next? A coup? A widening revolution? A massive crackdown? Who knows? Egypt has plunged into uncharted waters for the past two weeks, and they just got several fathoms deeper.

Early today, word went out—from several news services, CIA director Leon Panetta, and several Egyptian officials—that President Mubarak would announce, in a nationwide address, that he's stepping down. The Egyptian military's Supreme Council announced that it was meeting to consider the nation's crisis—without Mubarak present, much less presiding, as he usually does.

Yet when Mubarak finally stood before the camera (nearly an hour later than scheduled), he refused to resign, repeating only his earlier pledge not to run again in the next election—which is scheduled for September, seven months from now. Meanwhile, he will delegate some authority to his handpicked vice president (and longtime confidant) Omar Suleiman—but will retain for himself the constitutional privileges of the presidency. And he urged the young people in the square (whom he likened to his "children") to "restore the normal way of life to the Egyptian streets."

Not likely. The split-screen on Al Jazeera's live newscast showed the hundreds of thousands of protesters in Tahrir Square—who had been waving flags and singing, thinking they'd be celebrating victory—screaming and waving their shoes in anger. This revolution might be just beginning, and the next phase could be critical—possibly hair-raisingly violent.

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The Egyptian military holds the ultimate power in Egypt, as many have pointed out in the past week. It has also been noted that the Egyptian people, including the protesters, were fine with this fact, believing that the army (unlike the Interior Ministry's police) would stand with the people. The catch in this view is that, for 30 years, the military and Mubarak have been joined as one. Mubarak himself was an air-force officer and war hero, and in all the years of his presidency, he has treated the military well.

Now the military may have to choose sides. Mubarak's speech indicates he won't put up with these protests for much longer. He blamed foreign agents for fomenting the chaos, and, saying that he has spent his life standing up for Egypt, warned that he will not let outsiders dictate his country's fate.

Nobody in the square was convinced.

Earlier in the day, the army's commander, Hassan al-Roweni, told protesters, "Everything you want will be realized"—which led

Wael Ghonim, the Google executive who has emerged as one of the protest's heroes, to tweet, "Mission accomplished. Thanks to all the brave young Egyptians."

But if the military was in fact trying to pressure Mubarak out of office, he resisted—for now. His handpicked vice president, Omar Suleiman, who is also the nation's intelligence chief, appeared on TV soon after Mubarak's speech, telling the protesters, "Go home, go back to your work … don't pay attention to satellite television."

The questions now: Will someone on the inside try to oust Mubarak again? If Mubarak orders the army to disperse the crowds, will the officers and rank-in-file fall in line—or resist his orders? Or will the army itself fracture, with some officers obeying their president and others joining the opposition? In fact, now that Suleiman has publicly sided with Mubarak, can the army resist the regime's orders without fracturing?

Among the stash of secret diplomatic cables recently unearthed by WikiLeaks was one from the U.S. embassy in Cairo in 2008. It told of "a disgruntled mid-level officer corps" within the Egyptian army, "harshly critical of a defense minister they perceive as incompetent and valuing loyalty above skill in his subordinates." The cable might prove more prophetic than its author could possibly have imagined.

In a brand-new way, then, the balance of power now resides with the army. What are the implications for Egyptian democracy?

Military rule doesn't necessarily bode ill for its prospects. In some countries, Turkey for instance, the military has played a progressive role, advancing the causes of secular society and representative rule.

An Egypt untethered from Mubarak could follow a similar path. Most of its military's officers are college-educated, many have been trained at U.S. military academies, and the upper echelon—through extensive arms purchases especially—have maintained frequent contact with U.S., British, and French officers. The army is widely respected by the Egyptian people—a sentiment that's been solidified, and perhaps reciprocated, in these past two weeks of protests in Tahrir Square.

Still, there are limits to this line of thinking. If a group of officers does wind up ousting the president, whatever the motivations or circumstances, that is the definition of a military coup d'etat.

At this point, though, a coup may be the only way out. No doubt U.S. officials are extremely disappointed by Suleiman's decision to side with Mubarak. He has been a close ally to the United States, if sometimes on the very dark side. As Jane Mayer has reported in The New Yorker, Suleiman has actively aided the Central Intelligence Agency in handling the "rendition" (and subsequent interrogation) of suspected jihadists. The Israelis were no doubt also hoping that he would simply take Mubarak's place, as Suleiman has been the main enforcer of the peace treaty that's secured their southern border—and architect of the policy that has blocked attempts to funnel arms through Egypt to Hamas.

In any case, there is nothing now standing between the protesting masses and Mubarak's self-aggrandizing rule—except, potentially, the army or, rather, elements within the army, and perhaps not the top echelon at that.

There are few other civic institutions, mainly because Mubarak has shrewdly blocked any such institutions from forming. This is in part how he has hung on to power as long—and, so it seemed, as firmly—as he has: by claiming that, if he goes, the Muslim Brotherhood or anarchy will follow.

Mubarak's departure would have opened up the possibility that democratic institutions—real political parties, labor unions, professional courts, and so forth—might be created: not overnight, but along a timetable whose end was in sight. Now the possibilities seem more narrow than ever. This has all along been a classic "revolution of rising expectations." In the past two weeks, the expectations have risen to new heights. Today they were dashed to new levels of intensity. And so the revolution may escalate to new levels of rage.

Some factions of the military may have their own material interests in mind when forcing Mubarak out. As in many undemocratic countries, the military is more than just the military. Egypt's officer corps is said to own or operate vast networks of commercial enterprises, including water, construction, cement, olive oil, the hotel and gasoline industries—in all, about one-third of the country's economy—as well as vast chunks of seaside property.

The protests and the chaos they have unleashed have caused grave economic damage—an estimated $315 million each day. These losses, much of them due to reduced tourism, will continue as long as the protests continue—and the protests will continue, it seems, for as long as Mubarak stays in power.

The army's material interests don't mesh so well with the premises of a thriving middle-class society. And the absence of such a society—the combination of large numbers of well-educated young people and few jobs to suit their talents—has no doubt fueled these last two weeks of protest.

That same WikiLeaks cable from the U.S. embassy in Cairo reported that the military views efforts at privatization "as a threat to its economic position, and therefore generally opposes economic reforms." To the extent the military does retain power in Egypt, the people's "rising expectations" may be frustrated, regardless of the outcome of this current clash. Whatever happens in the coming days and weeks, Egypt, once the emblem of Arab stability, might be locked in the dynamics of revolution for a long time to come.